Core Insights - BBVA Argentina is experiencing a complex breakeven point, with Q2 2025 results indicating solid local operations, revenue growth surpassing inflation, and maintained efficiency [1] Financial Performance - The company reported revenue growth that exceeds inflation, suggesting a robust operational performance in the local market [1] Operational Efficiency - Efficiency levels have been defended, indicating that the company is managing its resources effectively despite challenging market conditions [1] Regulatory Environment - The regulatory framework appears to be stable, which may contribute positively to the company's operational stability [1]

Market Overview - Broader equity markets have reached record highs, driven by a favorable inflation report that increased the likelihood of an interest rate cut by the Federal Reserve as early as next month [1] - The July consumer price index (CPI) rose 2.7% year on year, slightly below the expected 2.8%, while the core CPI increased by 3.1%, exceeding the expected 3% [1] - The probability of a rate cut is now at 94%, supported by strong second-quarter earnings [1] Investment Opportunities - A 90-day extension on higher tariffs against China has led to a positive market sentiment, with investors adopting a wait-and-see approach [2] - Companies with high return on equity (ROE) are highlighted as potential investment opportunities, as high ROE indicates effective reinvestment of cash [2][3] - Notable companies with high ROE include Arista Networks Inc. (ANET), TE Connectivity plc (TEL), Motorola Solutions, Inc. (MSI), Banco Bilbao Vizcaya Argentaria, S.A. (BBVA), and AppLovin Corporation (APP) [2] Company Profiles - **Arista Networks Inc. (ANET)**: Engaged in cloud networking solutions, with a long-term earnings growth expectation of 16.6% and a trailing four-quarter earnings surprise of 12.8% [7][8][9] - **TE Connectivity plc (TEL)**: A global technology company focusing on connectivity and sensor solutions, with a long-term earnings growth expectation of 9.8% and a trailing four-quarter earnings surprise of 4.9% [10][11] - **Motorola Solutions, Inc. (MSI)**: A leading communications equipment manufacturer with a long-term earnings growth expectation of 9.1% and a trailing four-quarter earnings surprise of 6.8% [12][13] - **Banco Bilbao Vizcaya Argentaria, S.A. (BBVA)**: Provides retail and wholesale banking services, with a long-term earnings growth expectation of 6.9% and a trailing four-quarter earnings surprise of 7.4% [13][14] - **AppLovin Corporation (APP)**: Offers a software platform for advertisers, with a long-term earnings growth expectation of 20% and a trailing four-quarter earnings surprise of 22.4% [14][15] Screening Parameters - Stocks are screened based on criteria including cash flow greater than $1 billion, ROE greater than the industry average, price/cash flow lower than the industry average, and return on assets (ROA) greater than the industry average [5][6] - Additional criteria include a 5-year EPS historical growth greater than the industry average and a Zacks Rank of 1 (Strong Buy) or 2 (Buy) [7]

Mergers and Acquisitions - BBVA maintains its takeover offer for Banco Sabadell [1] Market Strategy - BBVA's decision persists despite investor backing for Banco Sabadell's sale of its UK unit TSB [1]

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Financial Performance - The profit attributable to the parent company for the six months ended June 30, 2025, was €5,447 million, up from €4,994 million in the same period of 2024, representing an increase of 9.06%[36] - Operating profit before tax increased by 8.3% to €8,424 million for the six months ended June 30, 2025, compared to €7,780 million in 2024[186] - Profit for the six months ended June 30, 2025, was €5,798 million, a 10.3% increase from €5,255 million in 2024[210] - Total gross income increased by 3.4% to €18,034 million for the six months ended June 30, 2025, compared to €17,446 million in 2024[186] - Fee and commission income increased by 5.9% to €6,514 million for the six months ended June 30, 2025, up from €6,149 million in 2024[190] - Net gains on financial assets and liabilities rose by 4.4% to €1,554 million for the six months ended June 30, 2025, compared to €1,489 million in 2024[194] Asset and Liability Management - As of June 30, 2025, total assets of the BBVA Group amounted to €776,974 million, an increase from €772,402 million as of December 31, 2024, reflecting a growth of 0.74%[33] - Total liabilities for the BBVA Group as of June 30, 2025, were €760,465 million, compared to €756,163 million as of December 31, 2024, showing a growth of 0.42%[39] - The total equity of the BBVA Group as of June 30, 2025, was €47,545 million, compared to €47,242 million as of December 31, 2024, indicating a slight increase of 0.64%[41] - The Group's assets under management reached €203,225 million as of June 30, 2025, reflecting a growth from €192,604 million as of December 31, 2024[41] Loan and Deposit Trends - Loans and advances to customers rose by 5.0% to €188,584 million as of June 30, 2025, driven by increases in corporate loans, public sector loans, and consumer loans[45] - Customer deposits at amortized cost increased by 1.6% to €230,120 million as of June 30, 2025, primarily due to higher deposits from public institutions[47] - Total loans outstanding reached €471,384 million as of June 30, 2025, up from €455,016 million as of December 31, 2024[127] - Average demand deposits increased to €333,931 million for the six months ended June 30, 2025, compared to €323,940 million for the year ended December 31, 2024[138] Non-Performing Loans and Credit Quality - The non-performing loan ratio decreased to 3.5% as of June 30, 2025, down from 3.7% as of December 31, 2024, positively impacted by increases in corporate and consumer loans[50] - The allowance for credit losses to total loans and advances at amortized cost decreased to 2.47% as of June 30, 2025, from 2.56% as of December 31, 2024[133] - Total impaired loans amounted to €14,131 million as of June 30, 2025, a decrease of 0.6% compared to €14,213 million as of December 31, 2024[136] Income and Expense Analysis - The net interest income for the Group in the first half of 2025 was €12,607 million, compared to €12,993 million in the same period of 2024, reflecting a decrease of 2.97%[38] - Personnel expenses for the first half of 2025 totaled €3,693 million, a 1.7% increase from €3,633 million in 2024[202] - Tax expense related to profit from continuing operations increased by 4.0% to €2,626 million in 2025 from €2,525 million in 2024, reflecting higher operating profits[209] Market and Economic Conditions - BBVA Research forecasts global GDP growth at 3.0% for 2025, reflecting concerns over protectionism and uncertainty in economic activity[173] - The Group is exposed to significant geopolitical and economic risks, particularly in Spain, Mexico, and Turkey, which could adversely affect its financial condition and results of operations[167] - The overall effect of changes in exchange rates was negative for the Group's income statement, primarily due to the depreciation of the Argentine peso and Turkish lira[157]

Core Viewpoint - BBVA's second-quarter net profit reached €2.749 billion, reflecting a 1.9% quarter-on-quarter increase, and a year-on-year growth of 9.1% for the first half of 2025, totaling €5.447 billion [1] Group 1: Financial Performance - In the second quarter, BBVA's net profit from the Mexican market was €1.265 billion, showing a year-on-year increase of 4.9% [1] - BBVA's Turkish operations demonstrated strong resilience, with a second-quarter net profit of €254 million, marking a year-on-year growth of 22.4% [1] - The overall trend indicates a shift of global financial capital from traditional Western markets to faster-growing emerging regions [1] Group 2: Market Insights - The management of BBVA noted that the ongoing investment in Turkey reflects a marginal improvement in international banks' confidence in emerging economies, particularly as inflation stabilizes and exchange rate fluctuations ease [1] - The strengthening bilateral trade relationship between China and Turkey is highlighted, with China being the largest source of imports for Turkey in the first half of the year [1] - There are potential opportunities for Chinese banks to expand their operations in Turkey if the financial market continues to open up [1]

Financial Data and Key Metrics Changes - Tangible book value per share increased by 14.6% year over year and 2.9% quarter over quarter, despite currency depreciation [4] - Return on tangible equity reached 20.4% and return on equity was 19.5% for the first half of 2025 [4] - Net attributable profit for the quarter was EUR 2,749 million, maintaining record profit levels despite falling rates and currency headwinds [5][7] - CET1 capital ratio improved by 25 basis points to 13.34% [8][17] Business Line Data and Key Metrics Changes - Core revenues showed robust growth with net interest income and fees increasing by 11% and 18% year over year, respectively [10] - Loan growth at the group level was 16% year over year, with Spain at 6.3% and Mexico at 11.7% [13][14] - Efficiency ratio improved to 37.6%, with costs growing at 10% below inflation [15] Market Data and Key Metrics Changes - In Spain, net profit reached EUR 1,100 million, supported by strong loan growth and improved deposit mix [23] - BBVA Mexico reported net profit of nearly EUR 1,300 million, driven by solid lending activity [27] - Turkey's net profit increased by more than 17% year over year, with significant NII growth [29] Company Strategy and Development Direction - The company aims to embed a radical client perspective and enhance customer service standards [38] - Focus on sustainability and enterprise growth, with a target of channeling EUR 700 billion in sustainable finance by 2029 [22] - Plans to improve profitability in core countries while managing costs and risk effectively [44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining strong profitability despite macroeconomic challenges [36] - Expectations for stable interest rates in the coming years, which will help improve margins [43] - Anticipated gradual decline in inflation and interest rates in Turkey and Argentina, with a focus on improving profitability [42] Other Important Information - The company plans to distribute EUR 36 billion of capital, with a maximum of EUR 24 billion allocated for regular payouts [56][80] - The strategic plan includes a target of EUR 48 billion in cumulative net attributable profit over the 2025-2028 period [46] Q&A Session Summary Question: What would your RoTE and CET1 available for distribution look like using current forward FX rates? - Management confirmed that forward rates are used in all countries except Turkey, where a range of depreciations is applied due to uncertainty [63][64] Question: Can you clarify the 40 to 50 basis points benefit from capital simplification? - Management stated that this benefit has formal approval from the ECB and is based on simplifying models in Mexico and Spain [66][68] Question: How much were the VAT gross impacts and the recognition of DTAs? - The total impact from VAT and tax rate adjustments was around EUR 250 million, with half attributed to VAT and half to tax rate impacts [75] Question: Is the intention to distribute all of the EUR 36 billion available for distribution? - Management indicated that the intention is to distribute this amount, with EUR 24 billion earmarked for regular payouts [80]

Financial Data and Key Metrics Changes - The tangible book value per share plus dividends increased by 14.6% year over year and 2.9% quarter over quarter [4] - Return on tangible equity reached 20.4% and return on equity was 19.5% for the first half of 2025 [4] - Net attributable profit for the quarter was EUR 2,749 million, maintaining record profit levels despite falling rates and currency headwinds [5][7] - CET1 capital ratio improved by 25 basis points to 13.34% [8] Business Line Data and Key Metrics Changes - Core revenues showed robust growth with net interest income and fees increasing by 11% and 18% year over year, respectively [10] - Loan growth at the group level was 16% year over year, with Spain at 6.3% and Mexico at 11.7% [14][15] - Efficiency ratio improved to 37.6%, with costs growing at 10% below the average inflation rate [16] Market Data and Key Metrics Changes - In Spain, net profit reached EUR 1,100 million, supported by positive dynamics in net interest income and lower operating expenses [24] - BBVA Mexico reported a net profit of nearly EUR 1,300 million, driven by strong lending activity [28] - Turkey's net profit increased by over 17% year over year, driven by higher core revenues [30] - South America achieved a net profit of EUR 421 million, representing a 33% year-on-year increase [33] Company Strategy and Development Direction - The company aims to strengthen its leadership position through customer service excellence and sustainable growth [38] - Focus on increasing contributions from sustainability and enterprise segments, with a target of channeling EUR 700 billion in sustainable finance by 2029 [23] - Plans to improve profitability and efficiency, targeting a cost-to-income ratio of around 35% by 2028 [47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining strong profitability despite macroeconomic challenges [36] - Expectations for stable interest rates in the coming years, which will help improve margins and profitability [44] - Anticipated gradual decline in inflation and interest rates in Turkey and Argentina, with a focus on improving asset quality [42] Other Important Information - The company plans to distribute approximately EUR 36 billion of capital, with a maximum of EUR 24 billion allocated for regular payouts [56][80] - The integration of Banco Sabadell is expected to enhance earnings generation, with further details to be provided in September [86] Q&A Session Summary Question: What would your RoTE and CET1 available for distribution look like using current forward FX rates? - The company uses forward rates in every country except Turkey, where a range of depreciations is applied due to uncertainty [63][65] Question: Can you clarify the 40 to 50 basis points benefit from capital simplification? - The ECB has formally approved the simplification, which will reduce RWA density and positively impact capital ratios [66][68] Question: How much were the VAT gross impacts and the recognition of DTAs? - The total impact from VAT and tax rate adjustments was around EUR 250 million, with half attributed to VAT and half to tax rate impacts [75] Question: Is there a chance to start the buyback before launching the offer for Sabadell? - The buyback will likely occur after the completion of the Sabadell integration process [91] Question: What are the prospects for lending growth in Mexico? - Lending growth is expected to remain strong, supported by investments and improved banking penetration [92]

Financial Performance Highlights - BBVA Group's Net Attributable Profit for 6M25 reached €5447 million, a 31% increase compared to 6M24[17, 21] - The group's CET1 ratio stands at 1334%, exceeding the target range of 115%-120%[15, 19] - The efficiency ratio for 6M25 is 376%, reflecting positive jaws[19, 33] - Sustainable business channeling reached €63 billion in 6M25[19] Key Growth Drivers - Net Interest Income (NII) increased by 112% compared to 2Q24 on a constant basis[19, 24] - Net Fees and Commissions increased by 177% compared to 2Q24 on a constant basis[19, 26] - Total loan growth increased by 160% compared to June 2024 on a constant basis[19, 32] - The group acquired 57 million new customers in 6M25, driven by digital channels[19, 47] Strategic Outlook - The company expects a ROTE of around 20% and an efficiency ratio below 40%[82] - The company anticipates approximately €36 billion available for distribution from 2025-2028[97]

Mergers and Acquisitions - EU watchdogs issued a legal warning to the Spanish government for obstructing BBVA's €13 billion bid for Banco Sabadell [1]